Finance Rules: EBW Financial News Radio


Do you really need long-term care insurance?

Do you have long-term care insurance? If not, you may want to reconsider, suggests Egan, Berger & Weiner partner Dave Beck, who on today’s podcast answers a handful of questions to help you better make this important decision.

  • Why is it important to buy long-term care insurance? Dave says, “Many people think it’s too expensive. Or maybe they think they really won’t need it. Well, I’d love to agree, but statistics show that the odds are against you.”
  • According to the National Bureau of Economic Research, only 10 percent of the elderly have private long-term care insurance. What are the insurance companies doing about this, because clearly this isn’t their goal. “Right,” says Dave. “Insurance companies are more than willing to let people purchase their policies. Because the marketplace isn’t responding, many companies have set out to determine why this is the case. For starters, they know that the current messaging of the product is not working. And they can assume that the current long-term insurance products themselves aren’t hitting the target of what consumers want.”
  • Now that the industry better understands consumer reluctance to purchase long-term care insurance, what is its answer? “A host of new options designed to match the needs of people in many different types of situations,” he explains, including the fact that insurance companies are changing the narrow focus and messaging of their policies from strictly long-term care expense protection to policies that can address the multitude of risks we experience as we age — including death, long-term care, death of a spouse, etc. “Currently, some policies now offered take into account the possibility that you may not use your long-term care policy — and if not, will pay a benefit to your beneficiaries upon your death.”
  • Do some policies account for the possibility that your spouse may predecease you? Dave says, “Yes, and if this is the case and you are no longer concerned with preserving your assets, these types of policies will allow you to receive back all of the premiums you previously paid.”
  • Also, is it true that many policies guarantee premiums, and you can fund them with a single large investment, or pay regular premiums for up to 10 years? “That’s right,” he notes. “The amount of premium placed into these policies drives the benefits you receive. And don’t forget to consider the annuities available that provide long-term care benefits as an addition or rider to your long-term care policy. While this rider will reduce your return, it is better than having no coverage. But let’s be clear: Though this new policy is appealing on multiple fronts, traditional long-term care insurance policies offer greater long-term care coverage.”
  • Do you think these new policies resonate with consumers? And will the insurance companies be successful in helping to address the broad challenges being created by an aging population? “At this point, your guess is as good as mine,” he adds. “What I am certain about, though, is that the problems these policies are designed to address won’t fix themselves. That’s up to individuals to decide — for themselves and their families.”

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